Vodafone Group (VOD) Q2 2025 earnings summary

Executive summary

• H1 FY25 results met expectations, with service revenue up 4.8% organically and Adjusted EBITDAaL up 3.8% year-over-year, despite a decline in Germany due to regulatory changes and the MDU transition.

• Strategic priorities focus on customer experience, operational simplification, and growth, with significant management changes, 6,300 role reductions, and investments in Germany and B2B capabilities.

• Portfolio reshaping advanced with disposals of Vodafone Spain and Vantage Towers, and regulatory reviews for UK and Italy transactions nearing completion.

• FY25 financial guidance reiterated, targeting Adjusted EBITDAaL of around €11bn and Adjusted FCF of at least €2.4bn.

• Pre-tax ROCE reached 7.2%, and a €4bn capital return programme is underway, including buybacks and a rebased dividend.

Financial highlights

• Group H1 FY25 revenue was €18,276m, up from €17,983m in H1 FY24; operating profit rose to €2,382m from €1,857m.

• Adjusted EBITDAaL reached €5.4bn, with a margin of 30.1%, and organic growth of 3.8% year-over-year.

• Profit for the period was €1,221m, reversing a loss of €155m in H1 FY24, with EPS at 3.92c (continuing operations).

• Adjusted free cash flow outflow improved to €950m from €1.4bn in H1 FY24, reflecting working capital phasing and capex timing.

• Net debt reduced to €31.8bn (2.6x net debt/EBITDAaL), with €1bn of €2bn buybacks completed post-Spain sale.

Outlook and guidance

• FY25 guidance reiterated: Adjusted EBITDAaL of ~€11bn and Adjusted free cash flow of at least €2.4bn, excluding discontinued operations.

• Germany expected to see similar performance in Q3 as Q2, with improvement in Q4 as the MDU impact fades and 1&1 contributions ramp up.

• FY26 expected to bring Germany back to positive EBITDA growth, supported by cost transformation and GenAI-driven productivity.

• Full-year dividend targeted at 4.5 eurocents per share, with ambition to grow over time.